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While a Harris victory would no doubt ensure smoother negotiations, there’s still Congress to deal with.
Less than a week after election night in the U.S., the United Nations’ annual climate conference begins in Azerbaijan. COP29, as this year’s conference is called, has climate finance and carbon markets on the agenda. It’s no secret that the outcome of the U.S. presidential election could shift the tenor of negotiations significantly on both topics. Everyone knows there’s one candidate who’s better for the climate and one who will be much, much worse.
Even if Harris wins, however, the United States may well continue to shirk its global climate finance obligations. If the U.S. can’t deliver on what it promises at COP29, it may not matter what actually happens there.
Negotiators at COP29 are tasked with setting what’s called the New Collective Quantified Goal on climate finance, a goalpost for the amount of cash governments must put up to meet global climate investment needs. Global South countries excluding China have suggested that they require more than $1 trillion per year in external finance to meet their climate targets. An agreed-upon NCQG will also help all countries flesh out the latest iteration of their national climate plans, also known as Nationally Determined Contributions, as required by the Paris climate agreement.
And yet preliminary discussions over the summer were inconclusive, not just on the NCQG target itself but also on which countries are expected to contribute and what kinds of financing (e.g. public, private, loans, grants) will count toward it. More controversially to some climate activists and civil society groups, negotiators are also using COP29 to finalize a framework for the implementation of Article 6 of the Paris Agreement, which calls for the creation of a global carbon credit market, which countries could use to trade emissions reductions and contribute to each others’ NDCs.
To put it simply: If Donald Trump wins, not much of this will matter. President Biden’s negotiators can still endorse ambitious NCQG and Article 6 targets, but there’s no evidence a second Trump administration will commit to delivering on them. Should Trump win, the U.S. will almost certainly cut itself out of the global climate finance architecture a second time. The Heritage Foundation’s Project 2025 plan, authored largely by Trump associates, not only calls for the U.S. to slash global climate and development funding (as Trump already called for in his first term) but also to withdraw from global negotiating fora entirely. In the breach, Trump administration diplomats will likely stress the importance of gas and non-renewable energy technologies (such as carbon capture) with an emphasis on ensuring domestic energy security and affordability, even as they prepare to gut most if not all of the Inflation Reduction Act and the Bipartisan Infrastructure Law.
A Kamala Harris victory next week will assuredly be much better for both global emissions reductions and the climate diplomacy landscape. While she has outlined no specific proposals for global climate policy in particular, there is also no evidence that she will renege on any U.S. global commitments made in the past four years or attempt to repeal any climate laws.
As president, she will likely preserve President Biden’s key global climate and development policy initiatives, including the Just Energy Transition Partnerships and the Partnership for Global Infrastructure and Investment. She will also likely support the Biden administration’s push to see the multilateral development banks support more investments in climate and development, particularly through mobilizing the private sector. The current World Bank President, Ajay Banga, was nominated by the United States in early 2023 after serving as co-chair of the Partnership for Central America, a private sector-backed economic development initiative launched by Vice President Harris herself as part of her broader engagement with the region. Their shared history suggests that they will continue collaborating on good terms if Harris is elected.
While none of this is directly connected to COP29 (and putting doubts about the efficacy of these programs aside), it speaks to the Biden-Harris administration’s commitment to, at the very least, platforming global climate and development issues. But will Harris actually deliver on the U.S.’s commitments to the NCQG or otherwise meaningfully increase the amount of public spending devoted to global climate and development goals? Probably not ― although in that case, Congress will be the more likely culprit, not her.
Attempts to appropriate additional funds for global climate programs are cursed with a severe case of legislative inertia. Congress did not significantly slash funding for global climate priorities during the first Trump presidency, but it also did not raise it much during the Biden presidency. Last year’s bipartisan debt limit negotiations didn’t help, of course. But even in the early Biden presidency, when Democrats had their narrow trifecta, Congress massively undershot Biden’s budget requests for global climate-related priorities. In fiscal year 2022, Congress passed less than half of what Biden requested; since then, presidential requests for global climate spending have ballooned in size, while appropriations have stayed flat.
This divergence reflects a stable short-term equilibrium: The Biden administration can showcase the full range of its commitments and bona fides and blame Congress for its failure to deliver on any of them, while Congress can coast on the spending cap deals it made to avoid government shutdowns. But it also ignores the planet-sized elephant in the room — that there’s been no new spending on mitigating climate change. Regardless of who is president, there’s only so much discretionary funding they can ever reallocate toward priority programs absent additional appropriations.
(Here it seems pertinent to remind everyone that the U.S. has never endorsed the global consensus framework of “common but differentiated responsibilities,” which would mean acknowledging a quasi-legal obligation to provide climate finance to Global South countries, on account of the fact that Congress has never been enthusiastic about this. The chances that anyone changes their tone are slim.)
In summary, even if Harris comes out on top on Tuesday, the U.S. will still be stuck in a holding pattern with respect to its global climate priorities. This puts the Biden administration’s COP29 negotiators in a vise: Pushing for a low NCQG gives other countries ground to criticize the U.S.’s inadequate ambition and care for the Global South relative to its ability to contribute, but pushing for an ambitious NCQG also gives other countries greater reason to criticize the U.S. if it fails to deliver. Ambition was never the problem; it has always been the delivery.
Optimistically, a Harris victory at least prevents the U.S. from being a roadblock to other countries’ climate action. But at a time when major Global North donor countries are cutting their aid budgets, American unwillingness to finance solutions to global climate and development challenges makes the rest of the world more dependent on private capital and, in turn, more vulnerable to market downturns, interest rate hikes, and capital outflows. (Alternatively, it makes Global South countries more dependent on petrostate wealth and Chinese imports for macroeconomic stability, although they may be less able to count on large Chinese capital inflows from here on out.) As expert report after expert report has detailed, climate change mitigation or adaptation simply will not happen at scale across the Global South without substantial new external financing.
Still, in lieu of new financing, a Harris administration could stress that efforts to catalyze private investment in the Global South (including through voluntary carbon markets) and reform global taxation also contribute to global decarbonization. And it could continue to argue that the U.S. is doing its part to decarbonize if it manages to pass more landmark climate and green industrialization laws like the Inflation Reduction Act. But it would be false to argue ― as President Biden and Treasury Secretary Janet Yellen have done at times, particularly in 2022 ― that the Inflation Reduction Act helps lower the cost of clean tech uptake across the Global South. This is not true — the credit for making clean technology, particularly solar energy, cheaper and more accessible for the Global South goes decisively to China. The U.S. is nowhere close to becoming a major clean technology exporter or a bona fide partner in green industrial transformation for any Global South country, policymakers’ pretensions to the contrary.
One prominent member of Harris’s advisory team, President Biden’s former National Economic Council Director Brian Deese, is trying to change that, advancing ideas like a “Clean Energy Marshall Plan” as an opportunity to deliver on both domestic industrial policy priorities and demands for global leadership vis-a-vis China; his writing exemplifies how American climate diplomacy is being subsumed into national security planning. (Deese is also a Heatmap contributor.) Tactically, this might work in the near-term: The bill to reauthorize the Development Finance Corporation, which would boost the U.S.’s ability to invest in decarbonization-related priorities across the Global South and particularly critical minerals supply chains, cleared the House Foreign Affairs Committee with bipartisan support over the summer. But this is not a strategy that on its own centers the climate and development needs of Global South countries.
So while a Democratic victory next week would certainly be a step toward continued climate action, and while what the Biden administration negotiates at COP29 will at least set a floor for future U.S. commitments (even if that floor is performative), we won’t see a major departure from the status quo unless a Harris administration can convince legislators that American leadership requires a lot more American money.
“We are not going back” ― this much is true. But it would be nice to go forward, too.
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This is the first story in a Heatmap series on how clean energy has fared under Trump.
The renewables industry was struggling even before Donald Trump made his return to the White House. High interest rates, snarled supply chains, and inflation had already dealt staggering blows to offshore wind; California turned hostile to the residential solar market; and even as deployment of utility-scale solar accelerated, profits haven’t necessarily followed. (Those were still reserved for the fossil fuel industry.)
Then Trump came into office, issuing a barrage of executive orders that, at best, didn’t help, and at worst threatened to choke off the industry’s remaining avenues for growth. Now, Republican legislators are eyeing the Inflation Reduction Act for red meat to feed their tax cut machine; Elon Musk — himself the richest green tech entrepreneur of all time — is captaining an effort to slash the size of the federal government, particularly environmental programs; and the federal regulatory apparatus has essentially ground to a halt.
The early days of the Trump presidency have turned a clean energy slump into a kind of green freeze, with projects being cancelled and clean energy investors in many cases fixating on hypothetical policy changes, as opposed to the ins and outs of any given quarter. This creates a kind of trap for green energy companies, which are being punished in the immediate term for bad results while investors sit on the sidelines until the final resolution of the IRA comes into focus.
Speaking about the solar industry specifically, Morningstar analyst Brett Castelli told me that near term viability is not going to be about the specifics of any given company’s financial performance. “It’s going to be about how much the IRA is potentially changed.”
That’s likely the case across the green energy sectors. The iShares Global Clean Energy ETF, which tracks a number of renewables companies, is down 14% since November 5, and down 20% in the past year. “All businesses like certainty,” Castelli said. “The renewables market right now is facing a high degree of uncertainty in regards to what changes are coming to the IRA.”
But not every company has been affected equally. Those that were already flagging have been quick to blame the political environment, while others have gamely tried to explain to investors and the public how their lines of business align with the Trump administration’s priorities.
Executives at the residential solar company Sunnova — whose stock has fallen to below a dollar a share since it issued a “going concern” notice, essentially notifying investors that its existence as a company was under threat — mentioned “policy” or “political” or “politicians” six times in its earnings call last week. Chief Executive John Berger told an analyst that the reason for the going concern notice was that “the overall environment is terrible. I mean, it’s the political environment, the capital markets,” and that the company “struggled to close some things after the election.”
Berger stepped down Monday, and Sunnova’s former chief operating officer Paul Mathews immediately took over. Mathews “will focus on disciplined growth, stronger cash generation, cost efficiency, and enhancing the customer experience,” the company said.
Other companies have told investors and the public that they’re scrapping expansion plans, in many cases due to a policy change or a market change running downhill from policy.
“Manufacturing is probably where we see the biggest concern,” Maheep Mandloi, a stock analyst at Mizuho Securities, told me. “A lot of solar and battery projects are getting pushed out.”
Among them, battery manufacturer KORE Power, said in Februarythat it was canceling a $1 billion battery project in Arizona. The Arizona facility was going to be supported with federal financing,specifically a loan from the Energy Department’s Loan Program Office for up to $850 million, but theconditional commitment never turned into cash in hand before the end of the Biden administration. Its new chief executive, Jay Bellows, told Canary Media that the company wanted to retrofit an existing facility into a battery plant instead.
Aspen Aerogels, which makes thermal barriers for batteries in electric vehicles,told investors in February that it wouldn’t move forward with a planned new plant in Statesboro, Georgia, and would instead “maximize capacity” at its Rhode Island plant. The company’s chief financial officer noted that it had already “decided to right-time” its Statesboro project in early 2023, “pre-empting a reset in EV demand expectations.”
And just last week, Ascend Elements, a battery materials company, said it was scrapping plans to manufacture cathode active material at its Hopkinsville, Kentucky plant,the Times Leader reported Thursday. Ascend said that it had agreed with the Department of Energy to cancel a $164 million grant that would support cathode active material (a key battery component) manufacturing, although a separate, $316 million grant for cathode precursor technology “remains active.”
But optimism still abounds — and it has nothing to do with any hopes about the fate of grants and tax credits under the IRA. Regardless of the law’s fate, the exuberance over artificial intelligence may prove to be an even greater subsidy.
In contrast to Sunnova, Sunrun — another residential solar company whose stock price has flagged since the election, but whose ability to stay in business has not been questioned — put a much more neutral spin on the political environment. Chief Executive Mary Powell told investors during the company’s earnings call in late February, “The fundamental long-term demand drivers for our business are incredibly strong and unrelated to any political party affiliation. Americans want greater energy independence and control of their lives and their pocketbooks. The country also needs more power from all sources to fuel rapid growth in electrification and data centers, and our growing fleet of energy resources will be part of the solution.”
Where once executives focused their rah-rah optimism on the declining costs of renewables, today they’re talking up their products’ quick path to deployment. The speed with which renewables can be built and switched on — especially solar and storage — compares favorably to the four-to-five year development timelines for new gas-fired plants. NextEra chief executive John Ketchum told analysts in a January earnings call “you can build a wind project in 12 months, a storage facility in 15, and a solar project in 18 months.”
That’s either the light at the end of the tunnel or the pot of gold at the end of the rainbow, depending on your level of fatalism or skepticism.
This oncoming demand could reignite the renewables industry even if it potentially loses access to generous IRA subsidies, Ben Hubbard, the chief executive of the infrastructure advisory firm Nexus Holdings, told me.
“The hyperscale datacenter demand is pretty massive, and when you have to really start massively upgrading your transmission and distribution infrastructure, those rates get passed on, unfortunately, to the average ratepayer like me and you and everybody else.” With higher rates, renewables could become profitable and investable on their own, without IRA subsidies, Hubbard said.
NextEra, a major renewables developer that also operates a natural gas fleet, has been one of the main promoters of the “speed to power” narrative. In its January earnings call, Ketchum told analysts, “We’re expecting load demand to increase over 80% over the next five years, six-fold over the next 20 years. And if you think about generation types and needing all of the above, they’re not all created equally in terms of timing.”
Although the Trump administration is seeking to unleash fossil fuel development, power plants don’t build themselves. They need, at the very least, turbines, and those gas turbines are not easy to get your hands on. As Heatmap has reported, manufacturer GE Vernova has only modest plans to increase capacity, and isalready getting reservations for turbine slots in 2027 and 2028.
“With gas-fired generation, the country is starting from a standing start,” NextEra CEO Ketchum said on the earnings call. “We need shovels in the ground today because our customers need the power right now.”
Developers and investors hope this means that data center developers and utilities will become both voracious and omnivorous in their power demand.
“I think what you’re going to see is the big tech companies, especially, are going to just have to eat the cost if they want to win the AI race,” Hubbard told me. “They’re going to take natural gas fuel, and they’re going to take biomass power, and they’re going to take solar. They’re going to take it all, because it’s almost insignificant relative to getting ahead of AI demand.”
Most of the industry, however, is gamely working through an environment where their day-to-day business may be fine, but their investors are still in wait-and-see mode.
“The common feedback we hear from a lot of investors is, 'I’ll just probably come back once the dust settles and I know exactly what things are going to change,” Mandloi told me.
That’s even as executives point to a glorious future of AI-driven electricity demand. But investors may be waiting to count their chips from the IRA before they’re willing to take a flyer on powering data centers that are yet to be built.
And there’s nothing certain about the AI boom, either. More computationally efficient Chinese models have thrown that energy narrative into doubt, driving down the share price of Nvidia, which makes the chips that consume all that data center power (along with the share prices of power companies with large natural gas fleets). That stock is down by almost 20% so far this year. If the chip designer’s AI profits are less than previously thought, the electron providers may have to settle for less, as well. Renewables companies are hoping the data center boom will be a case of “if you build it, they will come,” but investors aren’t yet quite willing to buy it.
For those keeping score, that’s three more than wanted to preserve them last year.
Those who drew hope from the letter 18 House Republicans sent to Speaker Mike Johnson last August calling for the preservation of energy tax credits under the Inflation Reduction Act must be jubilant this morning. On Sunday, 21 House Republicans sent a similar letter to House Ways and Means Chairman Jason Smith. Those with sharp eyes will have noticed: That’s three more people than signed the letter last time, indicating that this is a coalition with teeth.
As Heatmap reported in the aftermath of November’s election, four of the original signatories were out of a job as of January, meaning that the new letter features a total of seven new recruits. So who are they?
The new letter is different from the old one in a few key ways. First, it mentions neither the Inflation Reduction Act nor its slightly older cousin, the Infrastructure Investment and Jobs Act, by name. Instead, it emphasizes “the importance of prioritizing energy affordability for American families and keeping on our current path to energy dominance amid efforts to repeal or reform current energy tax credits.” The letter also advocates for an “all-of-the-above” approach to energy development that has long been popular among conservatives but has seemed to fall out of vogue under Trump 2.0.
Lastly, while the new letter repeats the previous version’s emphasis on policy stability for businesses, it adds a new plea on behalf of ratepayers. “As our conference works to make energy prices more affordable, tax reforms that would raise energy costs for hard working Americans would be contrary to this goal,” it reads. “Further, affordable and abundant energy will be critical as the President works to onshore domestic manufacturing, supply chains, and good paying jobs, particularly in Republican run states due to their business-friendly environments. Pro-energy growth policies will directly support these objectives.”
As my colleagues Robinson Meyer and Emily Pontecorvo have written, tariffs on Canadian fuel would raise energy prices in markets across the U.S. That includes some particularly swingy states, e.g. Michigan, which perhaps explains Rep. James’ seeming about-face.
Republicans’ House majority currently stands at all of four votes, so although 21 members might not be huge on the scale of the full House, they still represent a significant problem for Speaker Johnson.
On the Greenhouse Gas Reduction Fund, Canada’s new prime minister, and CERAWeek
Current conditions: Firefighters successfully controlled brush fires in Long Island that prompted New York Gov. Kathy Hochul to declare a state of emergency • Brisbane, Australia, recorded its wettest day in more than 50 years • Forecasters are keeping an eye on a storm system developing across the central U.S. that could pack a serious punch this week.
The nonprofit Climate United filed a lawsuit over the weekend against the Environmental Protection Agency and Citibank for withholding $7 billion in climate funds awarded as part of the Biden administration’s Inflation Reduction Act. The move escalates a dispute over some $20 billion in grants from the IRA’s Greenhouse Gas Reduction Fund, which was designed to help mobilize private capital toward clean energy and climate solutions. President Trump’s EPA Administrator Lee Zeldin has been on a mission to claw back the funds, claiming their distribution was rushed and mismanaged. In its lawsuit, Climate United says it has been unable to access the $7 billion it was awarded, and that the EPA and Citibank have given no explanation for this. It wants a judge to order that the money be released. “We’re not trying to make a political statement here,” Beth Bafford, chief executive of Climate United, toldThe New York Times. “This is about math for homeowners, for truck drivers, for public schools — we know that accessing clean energy saves them money that they can use on far more important things.” The Trump administration has reportedly demanded that the eight organizations tapped to receive the money turn over records to the FBI and appear in federal court later this month.
Canada’s Liberal Party has elected Mark Carney, a net-zero finance advocate, to succeed Justin Trudeau as prime minister. Carney is not a career politician. Instead, he comes from the financial world, having overseen both the Bank of Canada and the Bank of England, and is an evangelist for green investment and a net-zero financial sector. He was the UN Special Envoy for Climate Action and Finance in 2019, and “has made clean energy, climate policies and economic prosperity for Canada some of the central facets of his campaign,” CNN reported. If he wins the upcoming general election, Carney will be tasked with navigating President Trump’s tariffs and making key decisions about the future of Canada’s vast natural resources, including fossil fuels and rare minerals.
The U.S. has withdrawn from yet another global climate initiative, this one aimed at helping developing nations recover from natural disasters. The United Nations loss and damage fund was one of the biggest wins to come out of COP28 in 2023, with nearly 200 countries signing on in support. It’s expected to start funding projects this year. About $740 million has been pledged so far, and the U.S. has said it will give about $17.5 million, though it’s unclear if that money will actually be handed over now. “This decision, made by the nation with the largest historical responsibility for climate change, jeopardises vital support for vulnerable countries facing irreversible climate impacts,” said Ali Mohamed, the chair of the African Group of Negotiators.
The energy industry descends on Houston, Texas, this week, for the annual CERAWeek conference. This year’s event, titled “Moving Ahead: Energy Strategies for a Complex World,” will focus on the changing global energy landscape. Key themes include shifting regulations, the turbulent oil and gas market, electrification and power demand, the rise of AI, managing emissions, and the policy outlook for renewables. According toReuters energy columnist Ron Bousso, fossil fuel executives are going into the conference with a case of “Trump buyer’s remorse” as new tariffs and geopolitical policies from the Trump administration have “created turmoil in financial markets and clouded the outlook for the global economy and energy prices.”
Argentina will observe three days of national mourning after 16 people were killed in flash flooding over the weekend triggered by unprecedented rainfall. Nearly a year’s worth of rain – about 16 inches – fell in just eight hours in the port city of Bahia Blanca in the Buenos Aires province. Many people are still missing. Environment official Andrea Dufourg said the event was a clear example of climate change. “Unfortunately this will continue to take place,” Dufourg said. “We have no other option than to prepare cities, educate citizens, and establish effective early warning systems.”
Twenty-one House Republicans have signed a letter urging the GOP to uphold the Inflation Reduction Act’s clean energy tax credits in their budget bill, warning that gutting the credits would “risk sparking an energy crisis in our country, resulting in drastically higher power bills for American families.” That’s three more than signed a similar letter during the last Congress.